If you’re awarded a pain and suffering payment of less than $44,000 in Ontario, the money goes to your insurance company and you get nothing. But there are things you can do to protect yourself.
How well are you protected if you get into a car accident? Maybe not as well as you think.
Recently, one law firm has been sounding the alarm over quickly rising deductibles that could see most of the money you’re awarded for pain and suffering go to your insurance company instead of you.
Such deductibles jumped by 6.5 per cent in 2023 to a sizable $44,367. That means any award for pain and suffering — losses in an car accident that cannot be quantified in monetary terms — under that amount will go to the insurance company and you will get nothing.
If you find this number shocking, you wouldn’t be alone. Very few people know about the deductible, according to Nainesh Kotak, founder of Kotak Personal Injury Law.
“It is very unfair for victims of motor vehicle accidents,” Kotak says, “to be unable to attain any awards for pain and suffering because the statutory deductible is so high that their injuries do not exceed the deductible dollar amount.”
Another personal injury lawyer, Patrick Brown, a partner at McLeish Orlando Lawyers in Toronto, says it essentially means that “if you’re a victim and you’re awarded $60,000 for pain and suffering, you’re going to take home just over $15,000. The rest of that money stays with the insurance company, which is pretty harsh.”
At the same time, the standard income replacement benefit on your Ontario car insurance policy, which provides a weekly benefit if you’re unable to work due to a car accident, is 70 per cent of a person’s gross income, up to $400 a week — unchanged since 1999, despite soaring inflation.
In 2020, there were 101,572 total injuries related to motor vehicle collisions and 7,868 of these were serious injuries according to Transport Canada’s National Collision Database.
“As long as a vehicle is involved — it doesn’t matter if you’re an innocent pedestrian, an innocent cyclist, a passenger in a vehicle,” Brown says “That deductible is going to apply in the vast majority of cases.”
But while car accidents can happen at any time, it doesn’t mean you can’t prepare yourself for what to expect amid economic uncertainty.
Understanding the deductible
For a start, Kotak says, it’s important for people to know there is a statutory deductible that exists at all and what it means.
In order to get money for pain and suffering in the first place, a victim has to prove they have a “permanent impairment of important bodily, mental or psychological function,” Kotak explains, which is subject to the deductible that the insurance company keeps.
A major problem is that jurors on the case, like the general population, may not be aware of the deductible.
“Let’s say a victim has a case and a jury awarded them $44,000, for example because that is what they feel their injuries are worth,” Kotak says. “The person would get zero because the deductible would wipe it out.”
The FRSA also determines the monetary threshold required to eliminate the deductible in damages awarded to car accident victims and this threshold also continues to increase, Kotak says. In 2023 the threshold for nonpecuniary damages increased to $147,889 from $138,343.86 in 2022.
Any awards for pain and suffering under the threshold are subject to the deductible.
Before an accident
Brown says there are ways to protect yourself through insurance before an accident.
People can call up their insurance company and ask how much it would cost to increase third-party coverage, which is a type of coverage that financially protects you if you’re considered responsible for damages or injury to another person or their property.
At the same time, “if you’re ever hurt by someone who doesn’t have adequate insurance, this can also give you added protection,” Brown says.
You can also ask you insurance company how much more it would cost to increase your accident benefits.
“You can pay a slightly increased premium and you will get those additional coverage caps meaning, instead of having $400 per week available for income replacement benefits, you can buy up to $600, or $800 or $1,000 per week,” Brown says.
He added that there’s increases you can also make for medical, rehabilitation and caregiver benefits.
Ghada Alsharif – Last – The Star – 2023-02-27.
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